Bulgaria FinMin 'Ready to Backtrack' on Pension ReformDomestic | December 21, 2014, Sunday // 12:00| views
Finance Minister Vladislav Goranov. Photo by BGNES
The government is inclined to renounce changes to the pension system that make mandatory contributions to private pension funds optional, Finance Minister Vladislav Goranov said on Sunday.
"If freedom of choice is bad, we will give it up," he told private national channel NOVA TV, stressing the government was not intending to force anybody into transferring their money to the National Insurance Institute (NOI).
He added the cabinet would likely review the section concerning those who are currently becoming part of the job market, allowing their contributions to be redirected to a universal fund if they fail to make their choice within a year.
Goranov is referring to a decision under which citizens entering the labor market for the first time will have the right to choose whether to put their insurance contributions into the NOI or private pension funds.
Those born after 1959, on the other hand, will have to reaffirm their choice within a short stretch of time or their contributions will be automatically transferred to the NOI.
Bulgarians who decide to use private funds will be able to change their mind and redirect the flow of contributions to the national institution.
But after choosing to contribute to NOI one will not be able to switch to a private pension fund.
The opposition has called the move, which was hastily tabled in Parliament this week and passed on Friday evening during a 17-hour-long plenary session, a "nationalization" of private pension funds, with one of the coalition partners, the Reformist Bloc, vehemently resisting it.
For its part the main ruling party GERB has stressed "the right to choose" which in its words the newly-adopted bill observes.
On Sunday, Goranov pointed out that the current pension-system reform had eased a debate as to whether the current model is efficient.
"Half of Bulgarians do not know to which fund they are contributing. They have been allocated ex officio [to certain funds]... The hysteria which was sparked around this decision makes us think that the funds do not want to carry out a debate with their depositors," the minister argued.
Goranov fended off "nationalization" comments, which in his words are "propaganda."
Meanwhile financial expert Lyubomir Hristov warned the new changes could "guarantee to all its patients" they were facing poverty.
"This is the problem with whoice - it is about where choice does not exist. You bear the obligation to contribute 5% of your insurable earnings to a universal pension fund, but you don't have the choice as to how your funds are managed," he told the Bulgarian National Radio, stressing social insurance law still showed a number of flaws.
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